Most buyers think the home itself determines how much money they’ll need at closing. While that’s true for down payments and lender fees, your closing date can be just as important.
If you’re buying in November or December, you may be in for a pleasant surprise: your escrow costs could be dramatically lower than if you closed in the middle of summer.
Quick Refresher: What’s Escrow?
Your mortgage lender sets up an escrow account to collect property taxes and insurance. Each month, part of your mortgage payment goes into escrow so when the annual tax bill arrives, the lender has the funds to pay it.
But if you close mid-year, your escrow account won’t have enough in it by the time the next tax bill comes due. That’s why lenders often collect several months of property taxes upfront at closing.
The November/December Advantage
Here’s where timing matters. Let’s say property taxes in your area are billed December 1st for the upcoming year.
- If you close in July, you’ve only made 5 escrow payments by December. Not enough to cover the bill. Your lender may collect 6–8 months of taxes upfront.
- If you close in November or December, your escrow payments line up almost perfectly. By the time the next December bill comes due, you’ll have made 12 monthly payments.
That means the lender doesn’t need to collect thousands upfront. At most, they’ll collect a small cushion (usually 1–2 months, allowed under RESPA rules).
Example: $400,000 Home, $6,000 Annual Taxes
Closing Date |
Seller Tax Proration |
Lender Escrow Requirement |
Total Tax-Related Costs |
|---|---|---|---|
| July 15 | $2,795 | $3,000–$4,000 | $5,795–$6,795 |
| Nov 15 | $773 | Minimal (1–2 months max) | ~$1,000–$2,000 |
| Dec 1 | $0 (seller just paid) | Minimal (1–2 months max) | ~$500–$1,000 |
Why This Saves You Thousands
The difference between a July closing and a December closing can easily be $5,000 or more in upfront cash. That’s money most first-time buyers would rather put toward furniture, moving expenses, or a rainy-day fund.
House Karma Tip
If your timing is flexible and you’re worried about cash-to-close, aim for late fall or early winter closings. It won’t change the price of the home, but it can make your upfront costs a whole lot lighter.
Bottom line: Sometimes waiting a month or two to close can mean thousands saved at the table. For budget-conscious buyers, November or December closings are a hidden money-saving strategy.
